Think Tank: Lassoing Shoppers With Geofencing to Bolster Sales

Ashlyn Booth, director of retail property marketing for JLL, shares insights into the benefits of a geofence.

The author explains the role of geofencing in today's consumer market.

Shutterstock / Randall Vermillion

It wasn’t that long ago that retailers and shopping center owners hired surveyors to stand outside their space to question 500 mall-goers hoping to gain a better understanding of their shopping and spending habits. But, today all that’s needed to attain better shopper data is a geofence, a virtual boundary for a specific area, big or small.

When a location-aware device, like a cell phone, enters a geofence, a response is initiated that allows for outbound messages to be triggered or data pulled in from the cell phones entering the geofence. According to a recent report by Markets and Markets, location-based services are forecasted to grow from $8.12 billion in 2014 to $39.87 billion in 2019.

In today’s changing retail environment, increasing sales and loyalty is crucial to staying in the retail game. With geofencing technology we are getting a much richer shopper behavior profile than ever before. Retailers can tailor their store merchandise and promotions to exactly what the consumers want. For example, if you find out that through geofencing your shoppers are heading to a pet supply store immediately following your retail store, perhaps as a retailer you should consider adding merchandise that caters to pet lovers.

Apparel retailer American Eagle Outfitters turned to geofencing to boost both foot traffic and revenue at its outlet stores by pin-pointing shoppers who entered the geofenced mall parking lot with promotions. The campaign resulted in sales at its outlet stores tripling. Fast-food chain Taco Bell took a similar approach using geofencing to entice hungry eaters to download their mobile ordering app. Taco Bell targeted a specific demographic, under thirty, and saw an increase of sales by 6 percent. JLL geofences shoppers through its ShopPings program and sends retailer offers to shoppers as they enter the center, working closely with the retailers to measure the offer’s effectiveness.

But it’s not just retailers who can use geofencing — mall owners can use the technology to create better consumer loyalty programming, support their leasing efforts and also inform them about their local competition. A JLL-managed regional shopping center in the Minneapolis area recently tested the technology at their property and 100 other competitive assets.

At JLL, we geofenced the center and 84 other retail locations for two weeks to find out where our shoppers went right after they left the mall. We found that nearly 3,400 people went to Subway after visiting the mall, a restaurant we actually have in the center. If you do the math, that’s upwards of $20,000 in sales that left our center. But, now that we know, we have to ask why people are leaving and how we fix it. The geofence information will help the leasing team make better merchandising mix decisions and recommendations, and also provide information about how shoppers cross-shop at different properties in the market.

Ultimately, all of this information can be used to make more informed consumer marketing decisions. Instead of relying on assumed trade areas over a particular distance or drive time, geofencing allows retailers and owners to build their realistic trade areas for both residents and daytime users, as well as, identify business drivers like other retailers that customers are frequenting before yours.

By better understanding where customers are coming from, cannibalism can be reduced when expanding in an existing market. By identifying current customers, new markets can be identified that will support your retail business. And by identifying drivers to the site, co-tenancy can be better understood and maximized.

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